Gemalto Buying NXP Line for Contactless Growth

Two Dutch technology companies have struck a deal aimed at boosting the use of contactless payments made with mobile phones.

The Eindhoven chip maker NXP Semiconductors announced Friday a deal to sell its mobile services business to the Amsterdam smart card provider Gemalto NV.

The two companies said they expect the deal to close next quarter, after regulatory review. They did not give a price.

Gemalto said buying the business would strengthen its "trusted service manager" service, which people use to provide mobile phones remotely with digital credentials that activate the handsets' near-field communication chips to make contactless payments.

NXP's MiFare chips are used primarily in transit systems around the world, including the contactless stored-value CharlieCard used by the Massachusetts Bay Transportation Authority. The vendor laid out its specifications of the MiFare4Mobile interface in December.

Paul Beverly, the president of Gemalto North America in Austin, said adding NXP's technology would strengthen his company's position as a trusted service manager.

"There are not a lot of companies that the banks and the telecom operators can trust," Mr. Beverly said. "What you need is expertise in applications. That's what we do."

Beverly acknowledged that the mobile payment market is still in the very early stages.

"We are in a consultative role helping our customers build the business model," he said. "The result will be revenue in the next three to five years."

MasterCard Inc. and the mobile banking software vendor Monitise PLC said in November that they would work with third-party trusted service managers to deliver over-the-air provisioning services to link the handsets to credit and debit card accounts.

Randy Vanderhoof, the executive director of the Smart Card Alliance, a trade group that promotes chip cards, said Gemalto is well positioned to play a role as a trusted service manager, because it already provides technology for the chips that are used in mobile handsets around the world.

"Having that piece in place means we are only waiting for the mobile devices and the mobile operators," Vanderhoof said.

That does not mean that chip-enabled handsets will arrive in meaningful numbers any faster, he said. Many observers expect the introduction of such handsets to take at least two or three years.

Consumers may decide they do not want to wait for chip-enabled phones, Vanderhoof said.

"The landscape is changing," he said. "Now we're looking at alternatives like NFC stickers, contactless payment stickers, that can be put on the phone as a way to bridge the gap."

First Data Corp. demonstrated that technology in August, when it distributed 5,000 of its Go-Tag stickers to delegates and reporters at the Democratic National Convention in its hometown of Denver.

NXP said it would retain ownership of the specifications for the MiFare4Mobile interface and its associated intellectual property.

The company also said a business unit in France will continue to develop and market software and services that take advantage of the MiFare4Mobile interface specifications.